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Researchers studying how water rates are set

by K.C. Jaehnig

CARBONDALE, Ill. -- Hell hath no fury like a customer with a high water bill.

"People often consider water an inalienable right, so they get angry when they see their water bills double or triple," says Thomas J. Bik, a researcher in Southern Illinois University Carbondale's geography department.

Yet, water rates are -- or should be -- a function of the costs of operating the system, Bik notes.

"You're not buying the water -- you're buying a service: clean, safe water showing up in your house at a certain pressure 24 hours a day," he says. "The cost range for providing that service can vary greatly, depending on where people live, the source of the water, the cost of complying with various legal requirements and management costs."

Bik, geography professor Benedykt Dziegielewski, who heads the International Water Resources Association, and graduate students Jack C. Kiefer and Heru Margono are looking at what goes into setting water rates in about 500 Illinois communities. The project, funded by the Illinois Water Resources Center, should wrap up later this year.

When it's done, managers will be able to compare their rates and rate structures with those of similar systems across the state.

Shaping cooperative ventures is among the goals of Southern at 150, the blueprint for the University's development by the time it celebrates its 150th anniversary in 2019.

"The idea of the survey is not to show who has the best rate or the highest rate but to give managers a way to fine-tune their rate-making structure, to say, 'Your water system looks like mine. Why are you using that particular rate structure? How well is it working for your system?'" says Bik.

The research also should reveal whether systems in Illinois are using rate structures that reflect the full cost of providing water services. A switch to full-cost pricing could affect the state's smallest systems the most.

"Many of these systems are too small to afford full-time managers or the state-of-the-art treatment and distribution facilities needed to provide high-quality drinking water," Dziegielewski says.

In addition, the survey should show how water rates have changed over time.

"Our previous research found that 40 percent of systems had not had a rate increase in at least three years," Bik said.

"If inflation is about 3 percent, the costs of everything you use to make the water show up at the tap change by 3 percent. If the water rate doesn't go up by 3 percent, the system is losing money."

Add to inflation the costs incurred because of aging water systems equipment and those resulting from growing public pressure to meet drinking water standards, and the bottom line could well equal higher water rates.

But even if those rates go up, the researchers say, water is still a bargain, especially as compared to utilities such as gas, electricity and cable TV -- or those trendy little bottles of designer drink.

"Consumers will complain about the cost of tap water and yet pay 33 times more for bottled water that doesn't have to meet Safe Drinking Water Act standards," Bik says.

Smaller systems -- the ones most likely to see big rate jumps under full-cost pricing -- do have a few options open to them in trying to hold the line on costs.

"One is to take advantage of economies of size by merging operations and management with a neighboring water system," Dziegielewski says.

Making such a marriage work would require an attitude adjustment, however.

"While few small communities would even consider trying to operate their own electric system, many communities insist that they must have complete control over their own water system," Bik says.

"The literature is full of examples where community squabbles over control of local water systems resemble rivalries between high school sports teams.

"Communities must realize that the unit costs of operating small systems are often considerably higher than in large systems, and water rates will need to reflect these higher costs if the system is to be sustainable over the long term."

As for individual consumers who want to see lower water bills, they have one easy line of defense open to them.

"Use less water," Dziegielewski says with a smile.

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